The Best Investment Manager's Guide to Aluminum and Copper Price Trends in Q4 2024
In the world of investments, aluminum prices have been stealing the spotlight recently, outshining copper. However, according to analysts at Morgan Stanley, there may be a potential shift in favor of copper on the horizon.
Aluminum prices have surged by 11% due to various factors such as rising input costs, strong demand from key sectors in China, and temporary supply disruptions. The increase in alumina costs, a key ingredient in aluminum production, has led to higher aluminum prices for consumers. Demand for aluminum in China, especially in sectors like solar energy, grid infrastructure, and electric vehicles, has also contributed to its strong performance.
On the other hand, copper has been under pressure amidst global growth concerns and overstretched market positions. But analysts believe that copper is better positioned to benefit from improving market conditions and fundamentals. Demand indicators for copper in China are showing signs of improvement, with the Yangshan copper premium rebounding and inventories starting to draw down.
Morgan Stanley remains bullish on both aluminum and copper for the fourth quarter of 2024. However, they believe that copper has a stronger potential to outperform aluminum due to its recent underperformance and improving market dynamics. It is important to note that a worsening global economy could have a more significant negative impact on copper than on aluminum, as copper is more sensitive to economic fluctuations.
In conclusion, while aluminum prices have been strong, there are concerns about the sustainability of this trend. On the other hand, copper may be poised for a recovery with improving market conditions. Investors should keep a close eye on these trends to make informed decisions about their investment portfolios.
